Moderate Growth Seen In L.v. Economy

March 04, 1986|by DAN SHOPE, The Morning Call

Despite the possible loss of some 2,600 jobs at local plants of Bethlehem Steel Corp. and Mack Trucks Inc., Pennsylvania State University economist William D. Anderson sees moderate growth in Lehigh Valley's economic trends for 1986.

"Pennsylvania is switching from heavy manufacturing to a service-based economy," Anderson explained yesterday. "This is certainly going to cause hardships while the transition is in progress.

"In general, service-based jobs are slightly less-paying. But there are still some highly paid jobs in the sector. Not everyone will flip hamburgers at fast-food places. The service-based jobs include some high-paying positions in medicine and finance.

"So in general terms, we're looking for more moderate growth in 1986. I expect most, if not all, will come in the non-manufacturing sector."

The non-manufacturing sector includes jobs in construction, mining and service-producing industries. Included among the service industries are transportation and public utilities, wholesale and retail trade, finance, insurance and real estate and federal, state and local government.

"The best hope in the manufacturing sector is for a leveling off of losses," Anderson said. "During the past year, we've witnessed 3,600 jobs lost in manufacturing throughout the state. While the state has lost 3.2 percent in manufacturing jobs, the Allentown-Bethlehem area has lost four percent.

"What we've witnessed in the last three months is a light increase in manufacturing job level, which is certainly better than the decline through all last year."

In reviewing 1985, Anderson said, moderate economic growth continued, but not at the same pace as in the previous year.

Non-manufacturing jobs in Pennsylvania grew 4.4 percent compared to 5.7 percent for 1984. Job levels for the state rose each quarter, after seasonal adjustment, and reached a yearly record of 177,600, up 7,500 from a year ago.

Manufacturing jobs in the state fell each quarter of 1985 to a record low of 87,000. Thus there were 4 percent fewer jobs compared to 1984, which had shown a 2.8 percent increase over the previous year.

Overall, job levels in Pennsylvania for all non-agricultural establishments rose for the third consecutive year to 264,900 - a 1.6 percent gain - following a 4.6 percent increase in 1984.

As for the factory workweek, Anderson said there was a 0.1-hour gain, despite a seasonally-adjusted fourth-quarter decline.

"Also, a small gain in non-durable goods industries offset a fall in durable goods," Anderson said. "Coupled with an increase in electricity sales to industry, the workweek gains suggest that some life remains the the state's manufacturing sector."

Concerning construction, Anderson said non-residential contracts in Pennsylvania registered only half their 1984 level, or $10 million per month. Anderson said a poor fourth quarter was to blame.

"On the other hand, residential construction surged to $19.8 millionper month, up 17.9 per month," Anderson said. "Nearly identical to the state's advance was residential employment, up 2.4 percent for the year, despite a seasonally adjusted 1.4 percent fall in the last quarter. At 291,700, employment set a record, though the 1985 gain was only half that of the 1984 advance."

Additionally, the number of unemployed state residents fell for the second consecutive year, averaging 25,700 despite adjusted increases in the second and fourth quarters. This lowered the unemployment rate to 8.1 from 8.7 percent following a 3.3 percentage-point decline in 1984.

"A glance at (state) trends since 1979 highlights the structural economic changes taking place," Anderson said. "A considerable fall in manufacturing occurred over that period. However, the slack in that sector has been offset by strength in non-manufacturing, which registerred a 15.5 percent increase in jobs.

"Overall, (state) resident employment in 1985 rose 3.6 percent from 1979, while the number of unemployed was up 29.1 percent, and the unemployment rate was 1.5 points higher."